DTE, Consumers sue to block ‘money out of politics’ proposal approved by voters

Michigan utilities sue over Proposal 2, which passed Tuesday with more than 80% of the vote
Law bans utilities and some state contractors from donating to political campaigns, among other things
Lawsuit alleges that violates free speech and other constitutional rights

LANSING — Two days after Michigan voters overwhelmingly approved Proposal 2, DTE Energy and Consumers Energy on Thursday sued to stop implementation of new restrictions on their political giving.

The state’s largest utilities argue that the new law — approved by more than 80% of voters in Tuesday’s election — will violate their free speech rights and other provisions of the US Constitution.

Proposal 2 aims to prohibit direct or indirect contributions to Michigan politicians by the utilities or companies with more than $250,000 in state government contracts, along with immediate family members and other people with close connections.

But in a complaint filed with the US District Court for the Western District of Michigan, the utilities argued the proposal violates free speech and association rights guaranteed by the First Amendment and the Fourteenth Amendment’s due process clause.

Absent an injunction, the companies “will be forced to choose between surrendering their rights to political association and risking substantial penalties for exercising them,” attorneys wrote.

Policymakers and voters benefit from hearing Consumers’ perspective on debates over reliability, affordability and clean energy “even if they may sometimes disagree with it,” they added.

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The suit seeks a court order barring enforcement by the state. It names Michigan Bureau of Elections Director Jonathan Brater, Attorney General Dana Nessel and Secretary of State Jocelyn Benson (now the governor-elect) as defendants.

The lawsuit is “no surprise,” said Maura Cowley, manager of the Michiganders for Money Out of Politics campaign, which argues the law will “end pay-to-play politics” in Lansing.

“The corporations bankrolling our opposition have been gearing up for this lawsuit since Proposal 2 first qualified for the ballot, if not before,” Cowley said in a statement. The group is “confident Proposal 2 will withstand legal scrutiny, and we were fully expecting and are prepared to take on this and any legal challenge,” she added.

It’s already the second lawsuit over Proposal 2. The Mackinac Center for Public Policy announced a legal challenge Tuesday night after it became clear voters had approved the measure.

While opposition groups had argued the proposal would violate free speech rights, the utility lawsuit argues the new law also violates the Fourteenth Amendment because it is too vague in its reasons as to why utilities shouldn’t be able to continue donating to candidates — as well as who the proposal applies to working at or with these companies.

The complaint also contends the law violates the 14th Amendment’s equal protection clause by “impermissibly” targeting utilities “and a broad swath of people associated with utilities.”

The US Supreme Court has generally held that political spending by corporations is protected speech, most notably in Citizens United v. Federal Election Commission, but courts have looked more favorably on narrowly tailored proposals aimed at limiting corruption.

The law “unfairly targets a Michigan business,” along with its employees and their families, Consumers Energy spokesperson Katie Carey said in a statement. “Michiganders should not lose their First Amendment rights because of where they work.”

Corporations are already barred from directly giving to candidates in Michigan. The proposal would extend that ban to an affected company’s president, CEO, treasurer, similar officials, board members, people with “substantial” ownership — and their family members.

One of the plaintiffs in the suit is the 86-year-old mother of DTE’s treasurer, who would be barred from donating to political candidates “even though she has no role at any utility,” according to the suit.

The proposal would restrict political contributions to:

The governor, attorney general, state senator, representative or candidate for such office
A state or local party committee
A committee, other than an independent expenditure committee or ballot question committee, that makes contributions to a candidate
A member of the Michigan Public Service Commission

Company officials and immediate family members could also not donate to entities that are affiliated with elected officials or candidates and pay for their travel, meals, conference fees or other expenses.

Consumers and DTE have spent on political races through employee-funded PACs and “dark money” nonprofits that don’t have to disclose donors. The proposal would require disclosure by groups that reference candidates or ballot issues in so-called issue ads.

The proposal would not prohibit contributions to independent expenditure super PACs allowed under Citizens United, but it includes language that had anticipated potential legal challenges: “If any portion is found void, invalid or unenforceable, the remaining portions remain in effect.”